tv Closing Bell CNBC September 20, 2012 3:00pm-4:00pm EDT
finish this. >> thank you for watching street signs. closing bell is coming up next. >> cheers. hi, everybody, good afternoon, welcome to the closing bell. i'm maria bartiromo at the new york stock exchange. five companies are making public day bays on wall street today. >> the last time we saw that many ipo's on the single day was back in february. could be another sign of confident in the economy. guess who's making the biggest splash? trulia is up on its debut day. let's get caught up on the markets. where we stand right now, it's expiration date tomorrow. so we might get a little fluctuation in the markets in this last hour of trade. right now we're virtually neutral on the dow, at 13,578.
the nasdaq's down 8 at this hour. all of these well off the lows on the day. now at 31.74 on the nasdaq. the s&p 500 is down just two points. >> let's get more on today's big story. the ipo market heating up. five companies making their debuts today. >> five ipo's, that's the busiest week since late august, and the most in a single day, you guys mentioned it since february 8th. trulia really taking the show. pricing a dollar above its range, it's jumped close to 50% on its opening trading day. steady gains of just about 10% from the mid point of its price for the energy company. while all stocks that debuted today are in the green. not all have had such rosie reception from the market. the two banks, capital bank and national bank holding priced below their expected range, and only up slightly on the day.
capital also priced below its range, it's trading roughly flat. it's hardly enough to lift the performance of the broader ipo class this year. it's up according to renaissance capital. that means it's widely performing. it still hasn't ripened, which could be a problem for smith electric. the company makes electric vehicles and it's aiming to raise about $76 million if it prices at $17 per share. don't pounce on this one. the company is asking investors to pay for performance before it happens. you can't know how these things turn out until they price, when they trade. we're having a busy week this week. and we'll have all the latest tomorrow when we round it out. >> kayla, thank you. that brings us to today's closing bell exchange. signal growing corporate and investor confidence in the markets. are the companies trying to get in while the getting is good.
now, momentum is probably the best time to go public. >> let's talk about all of it in our closing bell exchange. we have a pair of contributors. we have also david menlo of ipo financial. what does it all mean? >> well, it certainly means that the money is out there, and the money is really burning a hole in many of the institutions and investors pockets. they want to deploy it, and for the right price they're going to do it. >> what's your expectation of the performance of these deals, david? >> i happen to think that what we saw today is a real indication that we are way past what happened four months ago with the facebook offering. everybody realizes that was a deal that was actually jaded just for the issuers. the underwriters now get, and they know they have to price the deals for investors. they're doing that, and in even the deals that price below the
initial range, they price it at a level below where they're working. that's a sign where everything is settling down. >> does this factor at all into your thinking of the markets right now? >> i agree with what's just been said about this being a -- in a sense a moving on from the face book disaster. but i think it maybe should have investors pause for a moment, ask themselves, are we getting a little too euphoric. the markets had a huge rally. we've been waiting for the market to rally based on what's been happening with quantitative easing. now with the ipo's coming on the market, the question for me is, what's the next stimulus to take the market higher. i don't think this is a bullish sign. i think it's positive. but we still have very light volume. i think investors need to get not too excited about these ipo's, even if we have a 40% upside. >> would you be selling into some of this euphoria in the markets right here? >> i would be trading down risk a bit at this point. i think there are students that
you can still be selective, but i think on a broad base. i think the market is pretty much rallied where it's going to rally for the year. we have three months left, i don't see much of a stimulus going-forward, you need to trade down some of your data, be a little more selective and not get too euphoric and hold on for the rest of the year. >> you've been bullish all the way up to this point. you're getting cautious here too, aren't you? >> for the same reason, i think for prudent portfolio management, it might be wise to take some off the table. we could have a little turbulence over the next several weeks going into the election. given how far we've run, we could see 3 to 5% correction. i think there are further stimulus coming, the fed is going to end up buying treasuries after the election, it doesn't politicize monetizing the deficit. senators are putting together something like simpson bowles. i think there are some good things coming. if you have big profits that are double-digits, i wouldn't mind
locking them in here and seeing how the rest of the year plays out. >> jump in here, what's going on in the action in chicago? >> well, you know, we all found the reports for the fed. the quarterly flow of funds interesting. the second quarter ended in june, debt, household debt was up 1.3%. on the 10th of september, we saw july. one month into the next quarter, consumer credit, show the chart please. it was down 3.3 billion. we're expecting up 9.5 billion. basically at a 12 billion swing the wrong way, i think this is very important to pay attention to. that was the first negative consumer credit number in 11 months going back to august of last year. >> is that good or bad for you? >> well, to me, if everything is about the consumer and everything about stocks is to sell the consumer, the consumer health is very important. >> but you know, housing's rebounding rather nicely. we're seeing the continued flow of data that suggests the
consumer has an environment in which he or she can buy homes. there's a story out today that talks about household formations picking up pace after slowing down rather dramatically, that could be a tail wind. we have to wait and let that play out. i'm not bearish, i just think the people who want to be prudent and lock in some profits can do it here. >> in terms of catalyst, david menlo, what do you look for in terms of the health of your ipo market and what it says about the rest of the market? >> the big signal here which gets no attention by the media whatsoever, is what's happening in the secondary side of the marketplace. secondary deals are coming very quietly behind the scenes, people don't talk about that, they don't grab the headlines, they're outpacing ipo on a ratio of 5 to 1. and the size of the deals, and the fact that they get done. and the discounts that the underwriters are granting these companies to get the deals done, they're astronomically good as far as what it says for the money that's being deployed on
the sidelines. jim this morning was talking about capital expenditures coming back to the levels of 2008. we are seeing proceeds of these offerings actually going to repay the debt. these companies are getting very lean, very trim, and they're ready for what's coming. >> great point, david. thanks so much. >> see you later. >> we'll see you soon. we're in the final stretch here. wall street had 50 minutes before the bell sounds. >> as i said, it is expiration date tomorrow, we could get some swings here in the final hour. stick around, you don't want to miss a moment of this jam packed edition of the closing bell. coming up, nice work if you can get it. a new study shows 1 million jobs in peril because of the looming fiscal cliff. and where is congress? taking a break again. find out what one former senator thinks lawmakers should be doing instead of leaving washington. parting shot.
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welcome back. a new study just out says 1 million jobs could be lost if spending increases don't take effe effect. >> i'm not laughing about this i'm laughing that this is still such an important topic, because nothing has gotten done yet. >> this is the longest cliff we've ever come upon. >> exactly. >> a decline in gdp. many say a dip back into recession, if we're allowed to
go over the cliff come january 1. with all of this looming large, our elected representatives are about to go on vacation again that will take them through the election. instead of addressing the fiscal cliff before they go, as maria was hoping they would -- our elected officials are finding time to vote on legislation which seemed more political than helpful. you may have heard the house passed by a vote this new buffet rule of law, which makes it easier to pay more taxes than e. something you can already do, of course, but it's names for warren buffett who has long complained that he does not pay enough in taxes. >> reaction from former republican senator judd gregg, he is co chair of the campaign to fix the debt. senator, good to have you on the program, thanks for joining us. congress just got back from a five-week vacation. now they're about to leave through the election. another vacation. this fiscal cliff is looming, what are your former colleagues thinking? >> well, they're thinking they want to get re-elected. and they better get home and explain to people why they
haven't done much? the fiscal cliff is going to have to be addressed. it's a pressure point. i call it the mother of all pressure points. congress usually acts when there's a pressure point coming up. hopefully they'll step back, take a look at this, and they need a comprehensive agreement on the issue of how you get the deficit under control. put aside the fiscal cliff and not put the country through that sort of trauma. >> they haven't been able to do it to this point. why should we believe they'll be able to do it between november 6th and the end of the year. what will change that will allow some sort of comprehensive plan to solve this issue? >> well, reality will set in. it's going to be pretty obvious very quickly, and probably sooner rather than later, that the economy is going to start to stall out here, maybe go into reverse if the fiscal cliff is
allowed to execute. >> the chance to do this is going to be in that lame duck session. i don't think you're going to get a comprehensive settlement in the lame duck settlement. hopefully what you'll get is a process, a procedure for reaching a comprehensive agreement, which will allow the congress to justifiably put off the fiscal cliff events. for example, a $50 billion down payment is being talked about, which would be half of what the sequester would be in the first year. directions to the way weighs and means committee to come back with medicare reform, which would meet spending and reduction targets. those types of ideas are being discussed, and as part of the fix the debt initiative, which i'm chairing with ed rendell and erskine bowles, we're trying to create resources for members of congress to do. >> what's going on as far as the federal reserve bailing out this
economy? did bernanke have any impact? and do you think it's extraordinary that we haven't seen any fiscal fix here, and it's really all been monetary fixes? >> yes, i agree 100%. and i think bernanke made a mistake for doing qe 3 at a lot of levels. it does risk inflation in the out years. it takes the pressure off congress to act. because it basically, by keeping interest rates so low, you're creating an artificial sugar high for the economy and the markets. i think it would have been much more constructive, if he really wanted to read the congress the riot act, to say, i'm not going to bail you out any longer, step up and deal with these issues. >> is he getting political? >> you know, that's a good question. the feds become under really inappropriate pressure from the political side of the aisle in my opinion. the last thing you want is a federal reserve that has to turn to the congress in order to get approval for how it's going to deal with the printing of money. and yet you have a congress
where there's a large number of people who want to intersect themselves into the audit process, affect the printing of money, i think he's worried about that, i'm worried about that. anybody who's rational is worried about that. you do not want elected officials involved in anyway in how big the money supply is. i think that probably does concern them. >> one of the great ironies, senator, is if we were allowed to go over the fiscal cliff and reign in spending, raise some taxes, it would improve our balance sheet in this country and would be less likely to be downgraded by the credit agencies that have been warning that we could be downgraded because of all the debt that's still growing in this economy. the federal debt that's growing right now. so how do we balance a solution to the fiscal cliff to try to keep the economy going without adding to the debt woes that still exist in this country? >> the way you do, you put in place a long term plan. along the lines of simpson bowles or simpson bowles plus.
which makes it clear to the people in the american market, you're going to get a handle over the problems that are confronting us, not today, but in the out years when our debt passes a level that we can afford to sustain and we can pay back. if you do that, i think the markets are going to say, okay, they've made the tough decisions in entitlement reform. they've done a tax reform package, as a result, we can have confidence in the economy. that will lead to a massive explosion in economic activity, because there will be some certainty on fiscal policy, and all this money that's sitting on the sidelines and all this energy would come into play. >> you think that's what they should do. do you think that's what they will do? >> yes. well, i hope so, i don't -- the odds are -- nobody really knows yet. nobody knows who's going to be president, who's going to control the senate or the house. rational people sitting down and looking at this, have to understand that the next president's not going to get through his full term without a
major financial crisis on his hand, because the market is going to lose confidence in the dollar at some point. it's going to be pretty clear we can't pay back our debts. rather than have that being addressed in a crisis atmosphere, why not do it in an orderly way. there's a large number of people, especially in the senate, senators who are working toward trying to reach some sort of comprehensive agreement, which wouldn't be arbitrary and wouldn't be the bludgeoning effect on the economy that the fiscal cliff would have. >> what's your take on 2013? looking at where we are right now, what's your expectation for the next year, in terms of the economy, based on what we have in front of us, this fiscal cliff? >> i think the opportunities for a really robust economic event is -- are right there, there are so many good things happening in this country. we're moving from an oil importing country to an oil exporting country. we're still the place where all the great technology is being
delivered. in my region of the country biomedicine is just exploding. the only thing that stands in our way is fiscal policy. i do believe with presidential leadership, it does take presidential leadership, to step up and make tough decisions and reach a comprehensive settlement on fiscal policy, you're going to see this economy explode. >> all right. we'll -- >> from your lips to the economic gods ears. >> thank you so much, senator. >> we'll see you soon. >> we're going to head toward the break here, we have 40 minutes left on the trading day. the dow up 27 points right now. >> how can you make money on the fall? the trade is next. how come gasoline prices go up so fast when oil spikes but go down so slow when oil prices plummet as they've done this week? we're looking for answers because we're looking out for you. you're welcome. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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oil prices stabilizing a brit today. they're still down significantly this week. over to you, sharon. >> it's been quite a shock to the oil market this week. we are looking at prices that are slightly higher here in terms of u.s. oil futures. we seem to be consolidating around the 88 to 92 dollar range, that's what they're expecting. they're expecting to see another perhaps pop up. you can tell by what may happen, by what's looking at the brent crude price, up $2 right now. look for news events to drive futures prices in the coming days, particularly looking for any more headlines out of the
middle east. we'll have more on what all of this means for prices at the pump coming up. bill, back to you? >> thank you, sharon, very much. how do you make money off of oils? has it hilt bottom? should you buy the commodity itself? are the oil companies themselves a better buy? let's talk numbers on all of this. it's richard ross. and on the fundamental side, it's ira eckstein. good to see you both, welcome. ira, what do you make of the plunge, and have we hit bottom, do you think on new york oil? >> well, i don't think oil should have been at $100 to begin with. you have saudi arabia coming out saying, we'll put more production on the market if need be, i think that's really one of the biggest catalysts why we came off earlier in the week. >> okay. charts, sir. >> what do you make of -- did we do technical damage to the price of oil this week with this big slide? >> this big slide, you want to be worried about the price of crude oil, about equities as
well. let's break down the chart and i'll show you why. coming into the week, we're all set up for success. we're testing $100. third round of quantitative easing. as you know, even the best laid plans of mice and men, boom, 7%. three-day decline. we take out the 50 day. we hold support around the 91-50 level. we think that gives way and we go much lower, why is this important? let me take you back to may, a very similar 7% decline unfolds over a 3 day period. from there, crude falls another 20%. equities, the s&p 500 is 7% lower. you want to look out below in stocks and crude. >> what about the stocks themselves? do they look better or not? >> they look worse, actually. >> on friday, can you see the xle, that's your energy sector spider or etf as we call them. we see a breakout above 76. that's a fresh multiyear high,
just like the s&p 500. that set the stage for a false breakout, false breakouts lead to fast moves down. have you that 50 day moving around around 72. that's your first area of support. you want to sell the underlying commodity and those energy and oil stocks. >> ira, what about you, oil itself or stocks? what would you buy? >> anything. >> you know what, i would be a seller, i would like to see a rally here. i think this is the sale of the century. we get above 95, $96. we're well supplied in the market, i think it's a key area. 95 to 96 to sell this market. you look at the oil stocks, most of them are 52 week highs and as a trader, as an investor, i would wait for a pull back before i buy anything. >> i think we have a consensus here. i don't know if that's a good thing or not. thank you for talking numbers on energy today. >> we have a mixed market today on wall street. we have about 30 minutes before
the closing bell sounds. the dow up 11 points. do high speed traders have an unfair advantage over ordinary investors. we talk about how to level the playing field next. is the federal reserve setting us up for a future financial disaster? one of the fed's biggest critics is with us today. he joins me at 4:00 p.m. eastern. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-294-5412.
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welcome back. high frequency trading today. he's calling in the question of the practice and giving investors an unfair advantage. >> the senate says they're looking into high frequency trading and trying to decide whether or not they need new legislation to regulate some of the practices that we're seeing in the marketplace. now, the senate heard from david hower, he's a former trader. he says it represents a huge threat to u.s. financial markets. >> remarkably, since the flash crash, there have been no substantial changes in market structure. the u.s. equity markets are in
dire straits. we are truly in a crisis right now. >> interestingly even some of those that were there at the hearing, to defend high frequency trading suggested we may have reached speed limits that are about as fast as markets ought to be going. >> do i think we've reached an equilibrium in speed? yes. i don't think moving mikes -- one or two mikes further is adding any value to investment public. but more concern is slowing down the market to a -- some common denominator. >> maria, take a look at this graphic. a fascinating chart from our friends. they show what they call micro flash crashes, there have been so far thisyear, an individual flash crash. they're seeing as many as 100 a day of these inexplicable moves. so far this year, there have been more than 10,000 micro
flash crashes over the course of just this year. and we're not done with the year yet. obviously, that is the kind of thing that's driving concern about whether hft is creating so much instability that it's driving individual investors out of the market because they're spooked when they see charts like that one. >> one of those experts speaking out against high frequency trading. he joins us right now, earlier, he testified before the senate banking subcommittee. he joins us now to explain why he thinks the practice is unfair. thanks for being on the program. what's the crux of your argument? >> well, the crux of the argument is increasingly the markets, that there are different order types, different technology barriers. there's different information practices that are happening, that are becoming increasingly more challenging to keep up with. i think the issue is, we need to think about reigning back some of these practices, we need to
try to defragment the market to make it simpler, and try to enable more people to get their hands on what's happening in the market at any given time. >> a lot of structural issues there, earlier today, former wall street insider who's becoming something of a whistle-blower on this topic, here's what he had to say on this issue. let's get your reaction to this. listen. >> that's probably pretty accurate, in terms of my frustration. i mean, i felt -- i'm playing poker with a bunch of guys, six months after i'm losing over and over and over they say, you know, we're cheating. didn't you know? everyone knew. and my problem was, after that i thought that somehow with my firm, that because i knew how these practices work, i could somehow trade around them. i came to the conclusion, that it is actually an unbeatable
system. >> is it? what do you think, larry? >> is it cheating? is high frequency trading cheating? that's the crux of what haim is saying at this point? >> i'm not sure that's exactly appropriate. haim was trying to be a high frequency trader himself. increasingly, to be competitive in the high frequency world, the cost of infrastructure is so tremendous it's cutting down the number of people. the real issue has to be with individual and institutions. individuals who are buying smaller positions, they have a great market, it's the institutions who are being picks off and i think the issue has really to do more with asset manager pension funds. than it has to do with individuals. it is dilutedly unfair for smaller high frequency firms that cannot compete with the likes of the bigger guys. >> is there a way to ensure that
all of the rules, the law of the land is followed by everybody? one trader makes the point saying, make the high frequency trading firms post for a full 50 milliseconds so that at least their bids and offers are real. no sub penny trading, some rules for dark pools as for the exchanges. is there a way to ensure that everybody is posting at the same time? or is that unrealistic? >> the time issue, i have a challenge with, mostly because computers get faster, networks get faster, and, if i keep my order in the market for ex-milliseconds, can i get out, can i get out, can i get out? we're going to have service attacks on these things. i'm not sure that's the issue. the issue is taking away some of the fragmentation of some of the infrastructure you need that forces this kind of trading. and also having a consistent set of rules, having market makers that provide liquidity, why
things spread for smaller stocks that they're trading less efficiently, creating some incentive to put capital to work. there are a whole lot of things that are challenged with this infrastructure that forces everybody into a nano second rate. >> right. >> so if you were the regulator, you're the guy now in charge of figuring out how to regulate in an equitable manner high frequency trading, what would you do? >> the first thing i'd do, is reduce the number of exchanges in dark pools. the second thing, better manage all the pinging that's going on. large traders have to ping thousands of pieces of information. >> if you're reducing the number of dark pools are you taking liquidity out of the market? >> no, the buyers who are buying and holding and trading, they're going to buy whether they're 100 places to trade or whether there are 10 places to trade.
i don't think we want to go back to the place where there are two places to trade. let's have some moderate number in between. and get rid of this whole idea that i have to ping 75 different places to find the other side of the trade. >> it becomes a little cumbersome after a while. >> it's ridiculous. >> yes, it does. thanks for joining us. appreciate it. >> we'll see you soon. thank you. >> heading toward the close, dow up ten points. again i mentioned earlier, tomorrow's an expiration date. we could head for changes as we head toward the close. famed hedge fund manager's warning investors not to trust any numbers out of china. listen. >> it's designed to suck western capital into the country and never have it go back out. and i keep pointing this out to people, that you're almost in a classic emerging market roach
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will the market be able to close out the green? the suspense builds. >> it's a buildup in volume. ahead of that, we haven't seen that today. it's about 2.6 billion shares, which at the close could put us below the 3.6 billion average we have seen throughout the year. in the meantime, we continue to see basically the tail of two indexes. the dow getting a lift from consumer stocks. from a turnaround in microsoft, which is bucking the down ward trend. the dow remains under pressure because of concerns about global growth. we continue to see weakness in the dow transports. there's been a divergence between the industrials and transports. the weakness continues. back to you. >> mary, thank you very much. while the transports have been down the past three months, the financials have been gain iing e
s&p 500 up 30% year to date. >> bob kaiser joins us right now. also with us, steven wood from russell investments. let's talk about this, this is really the group that has the momentum. what's going to drive it through year end. >> this is a vintage helicopter bend. >> qe three is the largest yet. it's directly addressing the mortgage market. the mortgage market to date hasn't done a lot to support economic growth. and ben bernanke is going to the source of the problem. the question remains, will consumers line up now and fill out applications to purchase mortgages? that's the question. >> that's the mortgage part of the market. overall, lower yields, lower rates that the fed has been pushing down, they're not good for the profitability of big banks and others that have to rely on higher rates to be able to borrow and make a profit on
that spread. there's no spread right now. >> there is spread. you can get three and a half in the mortgage. the fed is now committed to 2015 for banks to do the carry trade. the fed is pushing banks to issue mortgages, keep some for yourself. the ones you don't, give them to fanny and freddie. they're trying to stimulate housing. >> i want to ask you, steven. what are the financials trading at right now, based on earnings? >> 12 times forward pe. >> this is not expensive, when you look at the overall market. would you buy financials right now? >> you have to go through the old security selection process, greened it out. you have european banks which have not shrunk their balance sheets yet. they have been refinanced by the european central banks. a lot of the business they may not be partaking in as they comply with wassal three. it could create some market
opportunities, competitive opportunities. i would look at global franchises in addition to what we're looking at within the domestic markets. >> it's interesting when you look at the valuation. i'm going to talk about this later in my observation. 12 times earnings on the banks, versus the telecom stocks which have become so expensive. is that the way you want to look at investing in this market based on that? or is this just -- >> is there a reason that they're cheap right now? >> there's a reason they're cheap. there's a lot of uncertainty. what is going to be the flesh on the bones of dodd frank. in health care, the winners and losers have been made easier to pick out because obama care was upheld. we would need to see a little more clarity. if you look at year, for example irks you have a continent selling off at a significant discount to the united states. go in there with good security selectors. there's going to be some volatility but valuations matter a lot. >> we're at five and a half year
highs in this market. are we getting a little more expensive overall. >> 13.5 times, the s&p 500 is right where you need to be right now, as long as the economy continues to move forward and continues to grow 1.5 to 2%. our view is, the economy has fallen off a cliff since the start of the second quarter and it's moving sideways right now. qe 3, the feds boldest move yet really needs to be successful, you're seeing glimmers in recovery and housing. it remains at suppressed levels. if we can continue to move forward here, can you see the impetus come into the economy. >> ben bernanke has said, the success of qe 3 will be determined by job growth in this economy. will it create jobs? >> it will create jobs in the real estate related markets. that could be a start. >> are you sticking to your estimates in terms of double-digit growth for financials in the fourth quarter? s&p 500, the estimates from the analysts out there, have pretty
favorable expectations. >> calendar year 2012 earnings right now are at $103 a share. a year ago, we thought they were going to be 112. even if the forward expectations come down a little bit, the multiple is so reasonable there is room for the market to move higher. maybe the multiple goes from 13.5 to 14, even if forward expectations come down a little bit. they need to stay positive. >> very interesting. >> thank you, guys. >> thank you, steven. we'll see you soon. we're in the final stretch, about ten minutes before the closing bell sounds for the day. >> this is an interesting story, did walmart just declare war on amazon. you may think so, when we tell you what the giant brick and mortar retailer did to the online retailer. back in a moment. americans o work hard for a better future. since ameriprise financial was founded back in 1894,
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became the second manjor retailr to stop selling the kindle. >> walmart sells ipads and a number of other tablets, it won't be selling kindles after existing inventory runs out. walmart joins target, which made the same decision back in may. walmart's decision seems based on the bottom line. our customers trust us to provide a broad assortment of products at every day low prices and we approach every day merchandising through this lens. what's really going on here? walmart may be the largest brick and mortar retailer, but amazon dominates that space online, posing real competition for walmart as more people spend more money online. when unveiling the new kindles. jeff bazo said we want to make money when people use our devices not when they buy them. that willingness to undercut
prices does not seem to be working for walmart and target. >> thank you. i get the notion if they continue to sell the kindle, it's like they're selling trojan horses, right? the enemy is moving in on their territory. they're still going to sell other tablets. >> not only that, if the customer wants the kindle, they're actually hurting the customer, because they're not getting the product there. you see how popular it is. >> i think we've hit critical mass now, they're feeling the pinch. both target and walmart would like to see a greater presence online, and they're being capped by the tremendous competition that is amazon.com. >> amazon is an absolute monster. they were growing revenue, 15 billion a year, this company is doing so well, and i think you're right, i think walmart and all the brick and mortars are looking at amazon and saying, we need to get a lot more competitive. >> while some retailers may not have the wherewithal to stop
selling a kindle, which is a hot seller. walmart has that ability. target has that ability right now. >> and walmart's going to flex its muscle. >> it will be interesting to see if amazon responds in some way. they're not done yet. >> no. for sure. >> fun dance to watch. >> it is. >> we'll take a break and come back with the closing countdown. >> jim grant is with me, laying out the pace against the feds latest stimulus. and the unintended consequences it could have on the economy for generations. we're just minutes away from oracle's latest earnings. stay tuned. [ engine revving ]
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so who's in control now, mayans? just inside the five mint mark before the close. markets flat right now. we'll talk about that in a moment. i want to focus for a moment on sentiment and what it may be telling us about the future direction of the markets in three categories. stocks, oil and goal. first stocks, here's the dow. this year we've had a pretty good year, up 11% year to date for the dow jones industrial average. now, i want to lay the sentiment we most often follow which would be the volatility index, the
fear indicator. when fear goes up, we've seen it usually signals a bottom in the market. and it's the other way around. when it gets to a bottom, it usually signals a top of the market. as you see here, as the market has gone higher, the vics has gone lower. have we hit a top? this is the low for the year for the vics. it could be getting a little choppy right here. same thing for the price of oil, which has been coming back a little bit here lately. as you see, and we're down almost 6% year to date on new york crude right now. let's add in the energy vics. the ovx. and you'll see similar relationship here, inverse relationship as the vics peaks, the price of crude goes lower. it's not exactly clear that we've hit a bottom for crude oil at these levels, nor a peak for its own volatility and index.
one more, price of gold had a good year, up 13%. we're coming off a pretty good rally here recently. their fear indicator, is down at near lows of the year as well. you can see gold is up sharply, relative to what it's over fear indicator has done over that period of time. this one could be the one we're seeing a bit of a peak on right now. let's talk about it for a moment here. what do you expect to happen tomorrow? we have an expiration day, we need a little more volume. what kind of volatility do you think we'll have? >> it's not only volume. you're going to have a huge rewaiting in the s&p 500, you're going to see over 300 stocks with buyers who are on the close who will add into it, and about 150 stocks with sellers. >> what typically happens on a day like that? >> well, first of all, people try to prepare ahead of time, they do setup trades so they don't get caught off guard.
there are more stocks to add than subject. >> bob kaiser, this whole idea of sent imt right now, have we become a little complacent as the market goes higher? do you think -- i'm talking about stocks right now. >> i don't think there's complacency in the market, there's great expectations that ultimately will be successful. the markets had a lot of good news to hang its head on recently. the stock market's up. it's understandable the market would be creeping higher and the vics would be lower. if the economy looks like it starts to respond to qe 3, you could see volatility break out on the upside as we're seeing a little bit of a hint from the dow right now. as far as gold is concerned. gold, you have montization right now. you also have sovereign credit risk going lower. it's going to be interesting to see what happens to the price of gold in the months to come. how do you read sentiment on
wall street right now? >> well, i think they feel that they've got the fed behind the bulls right now. you have bernanke's wallet, and that's behind things. i think for now, many people are saying, it's going to be tough for the market to have a big pull back. the feds are rooting for it. to the point you made earlier, about the differences, all of those things have changed since qe 3 was announced. you had gold spike, oil spike, treasury yield spike. they've all come back down, the stock market has held its gain. bernanke has to be satisfied. >> isn't that the definition of complacency? we're all saying, the fed is going to bail us out? >> i still have a problem with the term complacency. the market is smart enough to know it's not supposed to fight the fed and the tape. if the tape and the fed start moving in different directions, we'll have a much bigger debate. >> thank you. as al,